Drew Horter: Horter Investment Management, our Registered Investment Advisor (RIA), was formed in 1991. Our goal was to find third-party money managers that could potentially prevent devastation similar to that of the Black Monday crash of October 1987. Horter has built about 250 investment advisor representatives (IARs) and 120 RIA firms that we work with across the country. We are registered in all 50 states.

Currently we work with 17 separately managed accounts that are primarily tactical asset managers and 11 different tactical mutual funds. Portfolio risk management is one of our key features.

Wally Forbes: In what capacity do you work with them?

Horter: They are all third-party managers and we work with them to assemble combinations of managers and portfolios that are non-correlated to each other and have different models and asset classes. We're very much concerned about risk mitigation, capital preservation and minimizing drawdowns so that people don't get hurt with severe corrections or a Bear Market.

Forbes: So you work with advisors and not directly with investors?

Horter: Yes. For our 250 advisors across the country, we use managers that we believe can significantly reduce the investors’ risk -- as compared to a buy and hold type of portfolio. So, when you look at our combinations (sleeves) of managers, our maximum drawdown that a client might receive is minus maybe 5% to 10% over the last nine years versus minus 51% for S&P 500. So, we’re focused on creating the ideal combinations of these managers for our clients.

In combining these non-correlated models, for example, if I take a 20 to 30-year Treasury portfolio manager that can be long or short (makes money if interest rates go up) and I combine that with a dividend paying strategy of the S&P 500 with the five highest paying dividend stocks of the ten sectors of the S&P, there's little or no actual correlation between those two managers. They're actually non-correlated. Yet the historical returns over time of both have been very good. So, non-correlation helps us minimize drawdowns, which helps us save financial lives when there's a major bear market or correction.

Forbes: You're dealing with the managers or are you dealing with investors?